Business wants tax on agenda

Big business is calling for more radical measures including tax reform to cut Australia’s debt instead of chipping away with “Band-Aid" solutions like a debt levy, but praised efforts to make the public service more efficient.

While business leaders welcomed the findings of the National Commission of Audit, there was scepticism about whether the recommendations were achievable, and opposition to a plan to cut tourism funding.

“This makes no sense at all. It is a dumb idea,"
Ken Morrison
, chief executive of Tourism & Transport Forum, said in response to a proposal to halve Tourism Australia’s budget.

“There are a lot of thoughtful ­recommendations in the commission of audit. This is not one of them."

ANZ Banking Group
chief
Mike Smith
said brave structural change was needed to address the budget deficit instead of a proposed ­deficit reduction levy. “There is no doubt the wounds are deep. It is im­portant to understand the situation does require major surgery. It is not a question of sticking Band-Aids on. Something like the wealth tax, frankly, is a Band-Aid," Mr Smith told The Australian Financial Review.

Trevor Rowe
, Rothschild Australia executive chairman and
UGL
chairman, said it was a “bold" report, which would be positive for markets, but he called for the government to consider a comprehensive tax review instead of a debt levy.

Must we be so draconian?

“The market implications would be positive if we got our debt down to 6 per cent of GDP but do we really need to be as draconian to get the debt down that quickly? By world standards our debt is not as significant," Mr Rowe said.

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“I strongly oppose the concept of a levy to pay down the debt. What we need is tax reform, moving away the burden from direct taxes to indirect taxes is more equitable."

Insurers welcomed a recommendation for high income earners to insure for basic health services in place of Medicare. “It recognises the role private sector needs to play. In New Zealand we can cover all healthcare costs, we think that’s good for the consumers,"
NIB
chief executive
Mark Fitzgibbon
said .

Business Council of Australia chief
Jennifer Westacott
said the commission was correct to focus on pulling back the cost growth of age pensions and family payments but adjustments should not hit the poorest too harshly. “The report provides a very clear and compelling case for a fundamental rethink of the respective roles and responsibilities of the Commonwealth and state/territory governments, and on the broader role of government," she said.

The Australian Industry Group described the recommendations as ambitious and said further evaluation was required. Chief executive
Innes Willox
welcomed measures to improve public sector performance and improving incentives to encourage greater workforce participation. But he raised concerns about recommendations on vocational education and innovation.

Deep and rapid transformation

“It is vital that, in striving to achieve the objectives of fiscal consolidation and ongoing fiscal strength, we also nurture the ingredients of longer-term productivity growth. This is particularly important [now] when the ­economy is undergoing such a deep and rapid transformation," he said.

The Financial Services Council (FSC) welcomed a recommendation to tighten the link between superannuation and eligibility for the age pension.

Clime Investment Management
chief investment officer
John Abernethy
said there was a case for the ­government examining new sources of taxation income; one target of that might be speculative trading in the ­Australian financial markets. “I came into the market in the 1980s when you used to pay stamp duty on all ­transactions and I lived through the 1992 recession when we ended up paying taxes on bank deposits, which I wouldn’t want to go back to," he said.

“But I think the mindless trading of billions of dollars through the stockmarket every day – through hedge funds, computers or stay-at-home investors just trading the market endlessly, they’re not investing in Australia, they’re just trading and manipulating and trying to get a margin doing nothing.

“That’s a legitimate target for a government that wants to raise revenue."